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Q1 growth rate best for three years

Figures from the Central Statistics Office show that the Irish economy grew at an annual rate of just over 6% in the first three months of this year.

Growth as measured by gross domestic product was 6.1%. Gross national product, often considered a better indicator as it excludes profits from foreign multinationals, rose by 5.1%, the strongest rate of growth in three years.

A breakdown showed that consumer spending moved up by 2% compared with the first three months of 2003, while industrial output rose by 8% and capital investment jumped by 12.4%. Net exports were up more than 20%.

Separately, the CSO released final growth figures for last year, which showed GDP growth of 3.7% and GNP growth of 2.8%.

The GDP figure was revised up significantly from the previous 1.4% estimate, while GNP was revised down. The changes were mainly due to a much higher level of business investment than was initially reported. Investment in buildings and equipment rose by 3.4% in real terms last year, compared with the previous estimate of a 2.9% decline

Friends First economist Jim Power said the construction sector accounted for much of the investment growth, but he said it was significant that business spending on machinery and equipment expanded by 17% last year.

On the Q1 figures, he said the growth in capital investment suggests a marked improvement in business confidence.

Bank of Ireland economist Dan McLaughlin, who recently predicted 6% growth for this year, said the latest figures lent solid support to his view.

He said consumer spending was soft in Q1, but should pick up as the year progresses in response to the improved labour market. Dr McLaughlin adds that the revisions made by the CSO to previous years' figures show that the Celtic Tiger never really went away.

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